In mid-June, Rhode Island became the third state to legalize the sale of marijuana for medical use, giving momentum to advocates who believe the legalization of the drug offers a dose of sanity for the nation’s costly health care system.

Now that more states are legalizing the sale of the marijuana used solely as a medicine, the next hurdle for reformers who say the drug is more cost-effective than pharmaceuticals is getting those who pay for health care—insurers and employers—to reimburse patients for its use.

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“It’s going to take an employer that says, ‘We’re not interested in marijuana as a gateway drug or any of that reefer madness. We want to talk about dollars and cents,’ ” says Allen St. Pierre, executive director of NORML (the National Organization for the Reform of Marijuana Laws). “If the idea here is saving money, then there’s no question that medical marijuana should be part of the ambit of choices that doctors, patients and employers can have.”

The effort to legalize the sale of medical marijuana has focused mainly on whether the medical effectiveness of the drug justifies making it legal to obtain in plant form. The medical benefits have been most closely tied to treating weight loss, nausea, pain, inflammation, spasticity and other symptoms associated with cancer, AIDS, cerebral palsy, muscular dystrophy and arthritis.

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Advocates for its legalization say its medical benefits should be made available to ease the suffering of patients. In a nod to the plant’s medicinal powers, pharmaceutical companies have produced synthetic forms of some of its active chemicals.

Less attention, though, has been focused on whether paying for patients’ medical marijuana is a cost-effective way to manage certain illnesses. Advocates argue that marijuana is an effective medicine that can also be a cost-effective alternative to pharmaceuticals.

Reimbursing patients who use it could push them away from otherwise costly drugs that some advocates say are not as effective. Employers, as payers of health care, should champion the legalization of medical marijuana as a potential cost-saving tool, advocates say.

Despite the recent legislative victories, however, even employers that want to reimburse patients who use medical marijuana cannot. Stephen DeAngelo, chief executive of Harborside Health Center, a medical marijuana dispensary in Oakland, California, has tried to provide a medical marijuana benefit through the health plan he provides to his 67 full-time employees.

“Blue Cross Blue Shield will not reimburse for medical marijuana; we checked,” he says. “It’s illegal under federal law and they can’t do anything that will break federal law.” Instead, he provides his employees, all of whom are medical marijuana patients, with a free gram of marijuana for every shift they work, a policy he says has lowered his company’s health insurance costs. “Many of these patients had drug bills of several hundred dollars a week before they began using medical marijuana,” he says. “Now they are about $40 or $50 a week.”

A week before Rhode Island legalized the sale of medical marijuana, a medical billing company in Los Angeles said it had successfully enabled medical marijuana patients to get reimbursed by major health insurance companies.

GE Medical Billing, which is not affiliated with General Electric Corp., says it contracts with California marijuana dispensaries, where patients with “recommendations” from doctors are allowed, under state law, to purchase the cannabis plant in forms smokeable, edible and generally ingestible, then helps the dispensaries’ patients get reimbursed from insurance companies for the money they spend on marijuana.

Patients can pay dispensaries around $60 for marijuana with names like Purple Flo and Hindu Kush, or—for patients not wanting to inhale—Bomb Brownies that are the specialty of one Los Angeles dispensary called Bakedery.

Dispensaries that contract with GE Medical Billing send expense claims of customers to insurers via the billing company. The company’s medical director, a licensed obstetrician and gynecologist named Gil Mintz, says he has helped patients get reimbursed by such insurers as Aetna, Cigna, UnitedHealth, and that at least one union, the Field Ironworkers Union in Arizona, Nevada and California, uses its services.

But health insurers dispute this. They say they cannot and do not reimburse patients for drugs, including medical marijuana, that are not approved by the Food and Drug Administration. A spokesman for Cigna cited this fact when explaining that the Philadelphia health insurer has no business relationship with GE Medical Billing.

“We don’t provide reimbursement for the medical use of marijuana,” said spokesman Mark Slitt. “We don’t have a business relationship with GE Medical Billing nor did we give them permission to use our logo on their Web site.”

An Aetna spokeswoman also said the insurer does not cover medical marijuana either as a pharmacy or medical benefit. Neither UnitedHealth nor the ironworkers union responded to several requests for comment. Cigna says it does reimburse patients for the use of a generic version of a drug, Marinol, which is a synthetic version of one of the marijuana plant’s active chemicals, tetrahydrocannabinol, more commonly known as THC.

Indeed, it appears that GE Medical Billing uses an insurance code for what appears to be a synthetic marijuana substitute called “cannarettes,” says Harborside’s DeAngelo, who asked his insurance broker to investigate GE Medical Billing’s assertions.

DeAngelo and other marijuana reform advocates say that until a federal agency says there is a use for medical cannabis, no insurance company will reimburse patients who use it.

While it is unlikely to happen anytime soon, the stance of both state and federal governments appears to be softening. Thirteen states have legalized the use of medical marijuana, and the Obama administration, in a reversal of Bush administration policy, has said it will not prosecute citizens who comply with states marijuana laws. On June 18, Reps. Barney Frank, D-Massachusetts, and Ron Paul, R-Texas, introduced legislation that would eliminate federal penalties for the personal possession of cannabis and the not-for-profit transfer of up to one ounce of pot.

The next step, advocates say, is to study whether medical marijuana does indeed reduce health care costs. No formal, peer-reviewed study of the cost-effectiveness of medical marijuana has been conducted, says Jeffrey Miron, an economist at Harvard University who has written about the cost of the federal prohibition against marijuana. And while $1.1 billion has been budgeted to compare the effectiveness of different treatments for the same condition, there is no plan to research the effectiveness of medical marijuana, says a spokeswoman for the Agency for Healthcare Research and Quality.

One informal study on the cost-effectiveness of using marijuana for medical purposes was conducted in 2006 and published in O’Shaughnessy’s, a non-academic journal that examines how cannabis is used in doctors’ practices. In it, many doctors said the use of marijuana led their patients to cut back on more expensive pharmaceutical drugs to treat the same symptom.

Until then, politicians and voters should not be the ones to decide which drugs are safe for patients, says one opponent of medical marijuana, Robert L. DuPont, a former drug czar under Presidents Nixon and Ford and currently the president of the Institute for Behavior and Health, a drug policy group in Washington. “The idea of approving drugs through ballot initiative and legislative action is a scary precedent for any medicine,” he says, though he agrees that buying whole-leaf marijuana is probably cheaper than buying pharmaceuticals.

While studies have shown marijuana to have medical benefits, it also has potential hazards, not least of which comes from smoking. An article in May in the journal Chemical Research in Toxicology said carcinogens in marijuana made smoking three joints equal to 20 or more tobaccocigarettes.

“I don’t know when the last time you went to a doctor and he said go out and get some weeds and burn them and that’s a medicine,” DuPont says. “Because smoke is toxic.”

Advocates, who are hoping that the FDA will recognize the plant’s benefits and allow patients to get reimbursed for ingesting the drug, say the push will have to come from the people who pay for health care—not just patients, but health insurers and employers too.

“The argument it should be legal is not just a medical point of view, but also from a point of view that … it will be less expensive than modern pharmaceuticals are. Those are two powerful arguments for making it legal.”